Happy Birthday

On the first day of this year, the euro turned eighteen years old. In the West, that’s a significant birthday—in other parts of the world, where life expectancy is much lower, an eighteen-year old is an older person—schooling is compressed, often down to zero, hard work and children are by then both abundant.

Currency is a fundamental part of finance—money, as defined by Philip Coggan, is the promise someone will pay you back. It therefore goes without saying that if a nation possesses a strong currency, one perceived to hold its value, this is major asset.

A corollary is that, like the nuclear club, the strong currency club is zealously, and jealously, guarded.

Until the First World War, roughly a century ago, the British pound sterling had been the top of the crop for a couple of hundred years. British debt in WWI, much of it contracted with US banks, together with the rise of huge American conglomerates in banking and oil, propelled the dollar onto the currency throne.

At the end of the XIXth century, men like Rockefeller, Vanderbilt, Morgan, and others created the business giants that catapulted the US economy onto the world stage.

Then, at the end of the XXth century, a new currency appeared. It happened in the heart of Europe, and the Brits didn’t like it at all. Many in England still long for an empire that  evaporated three generations ago, and the thought of an upstart replacing the pound was the last straw.

But replace it it did, and together with the renminbi—literally the people’s bill, or banknote—it has pushed the pound off the podium, which like any proper podium, only has space for three medals.

One indicator of success is the number of nations pegged to the currency—the list for sterling reads like the last cronies of a dictator: Falkland Islands, Gibraltar, Guernsey, Jersey, Isle of Man, Northern Ireland, St. Helena, Scotland.

The euro steamrolled through the peg list, in good part because of the French influence in West Africa—currencies pegged to the CFA franc jumped onto the new EU currency in 1999.

Country Currency Name Peg
Bahrain Dinar USD
Benin West African CFA Franc EUR
Bosnia and Herzegovina Convertible Mark EUR
Bulgaria Lev EUR
Burkina Faso West African CFA Franc EUR
Cameroon Central African CFA Franc EUR
Central African Republic Central African CFA Franc EUR
Chad Central African CFA Franc EUR
Cuba Convertible Peso USD
Denmark Krone EUR
Dijibouti Franc USD
Equatorial Guinea Central African CFA Franc EUR
Eritrea Nakfa USD
Gabon Central African CFA Franc EUR
Guinea-Bissau West African CFA Franc EUR
Hong Kong Dollar USD
Ivory Coast West African CFA Franc EUR
Jordan Dinar USD
Lebanon Pound USD
Lesotho Loti ZAR
Mali West African CFA Franc EUR
Namibia Dollar ZAR
Nepal Rupee INR
Niger West African CFA Franc EUR
Oman Rial USD
Panama Balboa USD
Qatar Riyal USD
Republic of the Congo Central African CFA Franc EUR
Saudi Arabia Riyal USD
Senegal West African CFA Franc EUR
Swaziland Lilangeni ZAR
Togo West African CFA Franc EUR
United Arab Emirates Dirham USD
Venezuela Bolivar USD

And all this happened in just eighteen years, during which time I watched the London-based CNBC show diss the euro in every which way, and the London merchant bankers, along with their friends in New York, and the Anglo-Saxon rating agencies, do everything in their power to destroy the currency union.

In the process, they caused untold distress to families in Greece, Italy, Ireland, Spain, and Portugal—anything and everything to throw those countries under the train, and sow discord in Europe. Their legacy is profound: fringe parties on the far right and far left, dealing in the same crappy mumbo-jumbo that placed Donald Trump in power—I don’t often plug books in these pages, apart from my own, of course, but treat yourself this Christmas, and read The Making of Donald Trump.

David Cay Johnston, a man with unusually large testicles, grabs you by the very same right from the first sentence—he’s known mumbo-trumpo for decades, and does a superb job of deconstructing America’s new and much lamented leader, reducing him to the selfish and ignorant conman he’s always been.

The second legacy of UK and US investment banks was unexpected: despite the pain—and inexplicably in the greedy and selfish corridors of Goldman Sachs, Morgan Stanley, and the other noble houses—all but a small minority of the people in those nations wish to stay in the euro.

And these are not PIGS, the generous sobriquet given to hard-working nations by Blackberry-twiddling, Excel-fondling children in London and New York—these nations, my little friends, are the cradle of European civilization: these are the peoples who invented, adopted, and disseminated philosophy, democracy, astronomy, and yes, history. Words that rhyme with money, but there the similarity ends: money, like yourselves, is merely a tool.

One of the obvious characteristics of this new kid on the block is the speed with which it became a mainstream player. I’ve written about that non-linearity when it comes to technologies—the eons it took for prehistoric cave art to turn to writing, and the lightning speed of media development in recent years.

Digital has changed everything, and the new new kid on the block, who everyone is trying to kill, recently touched ten grand—this child is secretive, clever, devious, and profound.

And thoroughly unpredictable—she must therefore be a lady, and her name is bitcoin.

The India Road, Atmos Fear, Clear Eyes, and Folk Tales For Future Dreamers. QR links for smartphones and tablets.

 

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